TMI Blog2022 (11) TMI 378X X X X Extracts X X X X X X X X Extracts X X X X ..... at income of the assessee has been assessed only on estimation basis and no evidence of concealment of income has been found in the case of the assessee - Thus as relying on decision of the Co-ordinate Bench of this Tribunal in a group concern M/s. S.M.Enterprises .[ 2022 (11) TMI 275 - ITAT CUTTACK] the penalty levied u/s.271(1)(c) by the AO and confirmed by the ld CIT(A) stands deleted. All the appeals of the assessee stand allowed. - IT(ss)A No. 53 to 55/CTK/2013, 67/CTK/2013, 68/CTK/2013, ITA Nos.12 & 13/CTK/2014, ITA Nos.210 to 214/CTK/2020, IT(ss)A No. 86 to 90/CTK/2013 - - - Dated:- 3-11-2022 - S/Shri George Mathan, Judicial Member And Arun Khodpia, Accountant Member For the Assessee : Shri Sunil Mishra, AR For the Revenue : Shri M.K.Gautam, CIT DR ORDER PER BENCH IT(SS) A Nos.53,54,55, 67 68/CTK/2013 are the appeals filed by the assessee and IT(ss) A Nos.86 to 90/CTK/2013 are the appeals filed by the revenue against the separate orders of the ld CIT(A) - 1, Bhubaneswar dated 18.3.2013, in Appeal No. 0358/10-11 for the assessment year 2004-05, dated 19.3.2013 in Appeal Nos.0359/10/-11 and 0361/10-11 for the assessment years 2005-06 2007- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ber of labourers for first week of September (4th September to 9th September), 2007 stood at 72 and weekly payment was only Rs.36,166/- in respect of these labourers. For the last week of September (25th September to 30th September), 2007, the number of labourers stood at 62 and weekly payment was only Rs.37,905/- in respect of these labourers. For the month of August, 2008, (22nd August to 27th August), the number of labourers stood at 55 and weekly payment was only Rs.31,093/- in respect of these labourers. This issue has been discussed by the A.O. on pages-3 to 4 of the assessment order. The A.O. 'also examined the seized wages register SAM-32, wherein bonus of Rs.2,83,240/ only had been paid which corresponds to 20% of total salary payments amounting to Rs.17 lakhs. Thus claim of labour/salary payment made by the assessee was highly inflated. Even the power fuel expenses claimed at Rs.5.51 crores were highly inflated. Considering the number of dippers (machineries) employed by the assessee, the average consumption of fuel would not have exceeded 1000 litres per day and even these were utilized for 300 days in that year, the fuel expenses could not have exceeded Rs.90 l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to page- 6 of the assessment order. These documents were prepared by Shri N. R. Nayak, GM of Balda mines and it was also duly signed by him on 10.02.2008. These documents were prepared to compare the raising cost before and after installation of screening unit for six mining contractors including M/s. Sarosh Aliza Mining, proprietary concern of the assessee. The average cost of production had been worked out at Rs.146/- per MT and that of the assessee stood at Rs.140/- per MT. As against these rates, the raising cost paid by M/s. Serajuddin Co. to the assessee @ Rs.650/- per MT and Rs.720/- per MT which showed inflation of the expenses to the extent of 200%. vi.) The A.O. has discussed on pages-7 8 of the assessment order that many incriminating documents were found from the premises of M/s. Serajuddin Co. during search operations on 28.05.08 which showed that the various mining contractors including the assessee used to pay back the amount in cash to the mine owner as high as 50% to 100% of total receipts for the contract work. For example, seized/impounded documents identified as RKS/Contractors payment details/sheet 1(9), sheet 1(4), sheet 3 etc. vii.) The A.O. has e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h dated 6.11.2013 in Appeal Nos.0273/11-12 0274/11-12 confirming the levy of penalty u/s.271F of the Act. 7. At the time of hearing, both the sides fairly agreed that the issue is squarely covered by the decision of the Co-ordinate Bench of this Tribunal in the case of S.M.Enterprises in ITA Nos.10 12/CTK/2014 Assessment Years : 2008-09 2009-10, order dated 20.10.2022, wherein, the Co-ordinate Bench in paras 10 to 12 have held as follows: 10. It was submitted by ld AR that the issue in these appeals is squarely covered by the decision of the Co-ordinate Bench of this ITAT in the case of Gobardhan Matia vs ACIT in ITA Nos.573 574/CTK/2013 order dated 22.9.2022, wherein, the Co-ordinate Bench has held in para 4 as follows: 4. We have considered the rival submissions. The levy/confirmation of penalty is based on the facts of each case. There is no presumption that the assessee is willfully violating the law. It is an admitted fact that notice u/s.153A has been served on the assessee and the assessee is required to file the return within 30 days. It is also an admitted fact that for obtaining of the Xerox copies of the seized document, it took more than 2-3 months. J ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is that where the Assessing Officer directs initiation of penalty proceedings in the assessment order but in the show cause notice, it is not indicated whether penalty is sought to be imposed for furnishing inaccurate particulars of income or for concealment of income by not striking off the inapplicable portion in the printed notice, whether it would vitiate the penalty proceeding and the consequential order of penalty or not. This issue has been decided in the favour of Revenue by the Hon'ble Mumbai High Court in the case of CIT vs. Smt. Kaushalya (216 ITR 660) (paras 7 to 12). It was held by the Hon'ble Mumbai High Court that section 274 or any other provision in the Act or the Rules, does not either mandate the giving of the notice or its issuance in a particular form. Penalty proceedings are quasi-criminal in nature. Section 274 contains a principle of natural justice of the assessee being heard before levying penalty. Rules of natural justice cannot be imprisoned in any straight-jacket formula. For sustaining a complaint for failure of principles of natural justice on the ground of absence of opportunity, it has to be established that prejudice is caused to the concer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nalty. The assessee had sufficient notice of the action of imposing penalty. Therefore the High Court did not find either any jurisdictional error or unjust exercise of power by the authority, iv.) Reliance is also placed on the decision of Hon'ble Bangalore ITAT in the case of M/s. Jaysons Infrastructure India Pvt. Ltd. Vs. ITO in ITA No.997/Bang/2015 order dated 09.06.2017 and Shri P.M. Abdulla Vs. ITO in ITA No.1223 1224/Bang/2012 dated 17.10.2016 wherein it was held that absence of specific mention in the show cause notice u/s.274 of the Act about the charge u/s.271(l)(c ) of the Act is not fatal to levy of penalty u/s.271(l)( c) of the Act. v.) In the case of Earth moving Equipment Service Corporation (84 taxmann.com 51), the penalty u/s. 271(l)(c) was sustained by the Hon'ble Mumbai IT AT on the ground that the AO therein had levied penalty after due application of mind, in as much as in the assessment order, it was mentioned that penalty proceedings were being initiated for furnishing of inaccurate particulars of income and the penalty was finally levied on the same ground. Further the ITAT held that mere non marking of the relevant clause in the notice is a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pra) is Per Incuriam and can't be considered as a binding precedent. vii.) Reliance is also placed on the decision in the case of Smt Ram Piari Vs CIT (327 ITR 318), wherein the Assessing Officer found undisclosed income from capital gains on account of sale of property and he imposed penalty which was upheld by the Commissioner (Appeals) as well as by the Tribunal. It was held by Honourable Punjab Haryana High Court that the contention that the penalty was liable to be set aside on account of the Commissioner (Appeals) describing the action of the assessee as showing inaccurate particulars, while the Assessing Officer described it as concealing the particulars could not be upheld. The observations of the Commissioner (Appeals) were also in the context of concealing and mere fact that mention of inaccurate particulars was also made, did not make any difference. It was clear that the assessee had concealed the particulars of income as well as given inaccurate particulars. The penalty provision was to provide remedy for loss of revenue for which the element of wilful concealment was not essential. viii.) It must be appreciated that even where the income is estimated, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... timating the income. As already mentioned, after the search and seizure of the above-referred to documents and after the officer found the abovesaid omissions of substantial collections from buses to the extent of Rs.42,334 in one assessment year and Rs.1,01,787 in the other assessment year, the assessee came forward to file revised returns, including therein, the abovesaid omissions also. He only claimed certain allowances in relation to the above-referred to omitted collections. As already seen, to a great extent, the said allowances were given, subject to only one qualification, viz., as against the claim for certain revenue expenditures to the extent of Rs.400 per day, what was allowed was Rs. 300 per day. In such a situation, it cannot be said that the revised assessment made based on the abovesaid revised return, was on an estimated income. At any rate, even assuming that the revised assessment was based on an estimate made by the assessing authority, it cannot be said that in such a case, there could be no scope for saying that the assessee has concealed his income, warranting penalty under section 271(l)(c). In our opinion, in this regard, the Tribunal has erred in law i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... culars. The words 'particulars of income' refer to the facts which lead to the correct computation of income in accordance with the provisions of the Act. So when any fact material to the determination of an item as income or material to the correct computation is not filed or that which is filed is not accurate, then the assessee would be liable to penalty under section 271(l)(c) of the Act. If the income had to be assessed under section 145 of the Act, then the presumption would be that the income was not properly returned, as held by Hon'ble jurisdictional High Court in CIT vs. Chandra Vilas Hotel [2007] 291 ITR 202 (Guj.). In this decision the Hon'ble High Court found that the assessee was not maintaining its account for six years and every year assessments were framed with the help and assistance of section 145(1) of the Act. Accordingly, the Hon'ble jurisdictional High Court observed that at least some order should have worked as an eye-opener for the assessee and that every year the assessee was repeating the same trend and still it wanted to say that it had not concealed the income or there was no fraud or gross or wilful neglect on its part. In the inst ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been substantiated and as well as it was not found to be plausible and bona fide one and it was against all human probabilities, especially when the conduct of the assessee showed that he had been inflating expenses and writing books well after the close of the year not only in the year under consideration but even in the preceding three assessment years also. In this view of the matter, the levy of penalty was held to be justified. The Hon'ble Supreme Court in the case of B.A. Balasubramaniam Bros. Co. vs. CIT [1999] 236 ITR 977, held that penalty can be imposed even on estimated addition also. It was held that where the assessee was not able to discharge the onus which was on it under the Explanation to section 271(l)(c) of the Act. The ITO was justified in imposing penalty, notwithstanding the fact that income was assessed on estimate basis. In view of above facts, the appeal of the assessee is required to be dismissed. 12. As it is noticed that the issue is squarely covered by the decision of the Co-ordinate Bench of this Tribunal in a group concern M/s. S.M.Enterprises referred to supra, wherein, it has been held as follows: 5. In respect of penalty levied for t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs, the penalty, if at all leviable, was u/s.271AAA of the Act and not u/s.271(1)(c) of the Act. Consequently, on this ground, the penalty as levied by the AO and as confirmed by the CIT(A) for the said two assessment years, stands deleted. Thus, ITA Nos.233 234/CTK/2020 stand allowed. 7. Coming to the appeals filed by the assessee in ITA Nos.199- 202/CTK/2020 for AYs. 2004-2005 to 2007-2008, a perusal of the notice issued u/s.274/271(1)(c) of the Act, dated 19.12.2014 for all the above assessment years, it is found that the AO has not struck off the inappropriate words in the penalty notices. A perusal of the decision of the Hon ble Supreme Court in the case of Dilip N. Shroff, referred to supra, clearly shows that the non-striking off of the inappropriate words in the paragraph deprives the assessee a fair opportunity to explain its stand thereby violating the principle of natural justice. The decision of the Hon ble Supreme Court in the case of Dilip N. Shroff (supra) when read with the decision of the Hon ble Apex Court in the case of Reliance Petro Products Ltd. (supra), would show that the decision in the case of Dilip N. Shroff (supra) continues to hold good in spite of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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